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IRS Whistleblowers: Easy Cash in Hard Times!!!

Wed, 23 Jul 2008 15:12:08 -0400

Busting tax cheats pays well - just ask Heinrich Kieber. This former computer technician from the tiny country of Liechtenstein stole 3 CDs worth of banking data containing damning tax-skirting evidence against many of the world�s richest people. Twelve countries have paid him for the information, including the U.S., Germany, Great Britain, France, and Italy. The stolen data has already led to the arrest of several prominent CEO�s in Germany, as well as to a Senate Subcommittee hearing of four wealthy U.S. citizens on Thursday, July 17th. But whistleblowers aren�t just reporting the wealthy. Some are reporting small business owners and average citizens. If the IRS acts on a �tip� provided to them, whistleblowers can get paid anywhere from 15% to 30% of the government�s �take� � not only the recovered taxes, but also the interest and penalties. Reporting tax cheats is easy; all a whistleblower has to do is complete an IRS Form 3949-A or write a letter and mailing the information to the IRS. And the pay is good; for instance, if a person or business owed the government $50,000 in back taxes, including penalties & interest, a 30% cut of that pie would be $15,000. Not a bad �piece of the action� for doing something as simple as filling out a form. As a result, the Whistleblower program is picking up steam and shows no signs of stopping. According to the Justice Department, for the fiscal year 2006, over $3 Billion was collected directly as a result of Whistleblower claims and resulting lawsuits. This may lead to guilty employers becoming paranoid and being tempted to take retaliatory action. And if they suddenly fire someone or try to 'cover themselves' by making a drastic decision, they're just asking for a lawsuit --- compounding thier problems with a wrongful termination suit. And even if Whistleblower was partially complicit in the fraud, it does not mean that they automatically disqualified from receiving a cut. It's simple --- the IRS wants the money and will oftenties make the best deal with whoever is willing to deal first.

Big Boys Can �Get Away� With Tax Evasion...

Fri, 11 Jul 2008 13:38:56 -0400

But only if they come forward to the IRS. The IRS has a �deal� for approximately 20,000 wealthy tax cheats who have hidden income with the help of Swiss bank giant UBS: come clean now and you won�t go to prison. In June, UBS private banker, Bradley Birkenfeld, plead guilty to helping California real estate developer Igor Olenicoff hide $200 Million offshore. During the trial, Birkinfeld revealed that UBS held �undeclared" U.S. accounts totaling $20 Billion. Olenicoff plead guilty and is now paying $52 Million in back taxes, interest and penalties. Now the IRS is on the hunt for more, sending up a �warning shot� with the issue of a �John Doe� summons, and offering to let tax cheats off the hook for criminal charges if they�ll turn themselves in. Willfully failing to file taxes is a felony, regardless if the money is in a U.S. bank account or an offshore account. If a person has more than $10,000 in a foreign bank account, they must file a Foreign Bank and Financial Account (FBAR) report with the treasury by June 30th. If a person willfully does not file the FBAR, if prosecuted, it�s punishable criminally by up to five years in jail and civilly by a penalty of $100,000 or 50% of what's in the unreported foreign accounts, whichever is greater. However, under the IRS �voluntary disclosure practice�, if a tax evader voluntarily comes forward, corrects his returns and pays the tax before the IRS begins an audit or a criminal investigation, chances are good he will not be prosecuted. It�s a lot easier for the IRS to prove that a person hasn�t filed a FBAR than to prove tax evasion. This would be a good time for a person to come forward. If the IRS has to hunt them down, they will not be so forgiving.

Recession Will Create an IRS �Frenzy�!

Thu, 10 Jul 2008 14:38:33 -0400

Actually, I'm more inclined to believe ex-Sen. Phil Gramm's observation that the current recession is more "emotional" than '"actual." But just in case I'm wrong, as Americans struggle to make ends meet in a sluggish economy, many will be tempted to dip into the money that they should pay to Uncle Sam. If people are forced to choose between paying for gas, food, the house payment or the IRS...they�ll pay for the necessities and deal with the IRS later. We can expect to see increased incidences of: 1. Employees who substantially increase the number of exemptions they are claiming at work, so they can get more take-home pay. 2. Self employed taxpayers who stop making their required estimated tax payments�as well as not filing their 1040�s 3. Businesses owners not making their payroll tax deposits on time or at all, and instead use the payroll tax money to keep their businesses open. 4. Many who do not file their 2008 tax returns - since they owe money However, not paying the IRS what is owed, and especially not filing tax returns at all, is a choice that can have dire consequences. Most people don�t realize the power of the IRS to get what is owed to them. Unlike credit card companies or mortgage companies who have limited power in trying to collect an overdue debt, The IRS can take your wages, 401(k), social security, seize your property, put a lien on your house, or even send you to jail. Plus, they can shut a business down in a heartbeat.

Protect Your Social Security From IRS

Mon, 30 Jun 2008 16:24:57 -0400

Did you know the IRS can take anyone�s Social Security to satisfy a tax debt? It�s true. If you owe money to the IRS, and you are receiving Social Security benefits, the IRS can take up to 15% of your Social Security payments to satisfy your tax debt. Prior to 1996, there was a $750/month �off limits� amount that had to be left for the Social Security recipient. However, that changed with the introduction of the Federal Payment Levy Program, which allowed for 15% of the total monthly payment to be collected - regardless of the amount. If you�re counting on Social Security benefits to live, you can�t afford to let the IRS just waltz in and take 15% of your livelihood without a fight. The IRS must send you a �Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing� form. At this point you�ll have 30 days to respond. You have a few choices at this point � you can either; #1: Pay the tax, #2: Negotiate an alternative payment method (payment plan, partial payment plan, Offer-in-Compromise), #3 Be declared non-collectible (hardship) status, #4: File for an appeal, or #5: Ignore the warning and do nothing. If you decide to do nothing and you don�t contact the IRS, after 30 days they will submit your levy to the Financial Management Service (FMS) and 15% of your Social Security will begin to be taken to satisfy your tax debt. Depending on your situation, you may be able to qualify for an Offer-In-Compromise and end up paying the IRS significantly less than you owe. To increase your chances of having your offer accepted, it would be a very good idea to have your paperwork prepared by a competent tax attorney.

Foreclosure? This May Be the BEST Time to Deal with an IRS Problem

Fri, 27 Jun 2008 16:11:43 -0400

According to RealtyTrac.com, foreclosures in April 2008 involved 243,353 homes nationwide � a 65% increase over April 2007. Plus, in this desperate U.S. economy, for every home actually foreclosed on, there are 5-10 other homeowners hanging on by their fingertips, just trying to keep their homes. With higher prices on gas and food and no increase in income, thousands of broke, desperate Americans will start to dip into the 30.8% on average that Federal, State & Local Governments are taking from their paychecks � causing another more formidable problem � the IRS. Surprisingly, it is during this otherwise bleak period when a person has nothing � no equity, no savings, and/or no retirement accounts � that it�s the BEST time to resolve their problems with the IRS. In this bad economy, if a person owes money to the IRS, they may try to avoid the problem by not filing their 2007 tax returns -- which is really one of the worst things to do. ALWAYS FILE YOUR RETURNS ON TIME (honestly) -- or at leasy request an extension. Others may substantially increase the number of exemptions they are claiming at work, so they can get more take home pay. Not a good idea: This means at the end of 2008 they will be totally upside down and owe even more taxes, penalties and interest. Either way, it�s a bad situation. However, there may be a light at the end of the tunnel. If you have nothing � no equity, no retirement, and no savings, there�s a good chance that the IRS will consider you Currently Non-Collectible, or they may consider a lowering of your taxes and penalties by coming to an Offer-In-Compromise. You may never even have to talk to the IRS and we may be able to negotiate a lowering of the taxes and/or the penalties that you owe.

IRS Increases Mileage Rates for 2nd Half of 2008 to 58.5 cents

Tue, 24 Jun 2008 11:11:00 -0400

WASHINGTON � The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc. 2007-70. It seems odd that one rate wasn't chosen --- why not simply put the two rates and average them together? this will surely cause some inaccurate returns for those who file their own returns and can't quite understand the bifurcated schedule.

"Applying" for Economic Stimulus Payments

Mon, 16 Jun 2008 16:27:00 -0400

We have been getting a lot of calls from taxpayers wondering how to apply for their economic stimulus check. Our quick answer is that there is no need to apply --- as long as the taxpayer filed a return, the IRS will take car of the rest. But I realized the answer wasn' good enough -- -there are certainly millions of people with no taxable income who are eligible to apply for a stimulus payment and here's how they can do it.

The application is in fact a simplified tax return known as a 1040A. A 1040 And in fact, the IRS even offers The application is in fact a simplified tax return known as a free softwarefree software for taxpayers filing a tax return solely for the purpose of receiving an economic stimulus payment.

Additionally, in order to be able receive an economic stimulus payments, generally, taxpayers must have a valid Social Security number, have at least $3,000 in qualified income and not be a dependent or eligible to be a dependent on someone else's return.

So once again we see the solution to a tax issue begins with filing returns. So alway file your returns! It is not a crime to owe the IRS money*. It can be a crime not to file returns.

*but note: all bets are off when it comes to 941 taxes..in Connecticut, at least, an employer who willfully does not send in an employee's withholding can be subject to a pretty nasty felony.

IRS Joins Other Countries to Dismantle Offshore Accounts

Wed, 04 Jun 2008 14:05:47 -0400

Wealthy tax evaders should be losing sleep as news spreads of the IRS and other nations teaming up successfully to finally crack the formerly impenetrable offshore �tax havens� like Switzerland and Liechtenstein. An estimated $6 trillion is thought to be hidden from the tax authorities of various countries. But now, with new agreements in place, the U.S., Britain, Australia, Japan, and Canada finally have wealthy offshore tax evaders calling their lawyers and accountants in a panic. These countries are now finally able to put pressure on the over 40 nations traditionally seen as tax havens, Every country has its share of tax dodgers, and these countries all want to get their hands on that missed tax revenue, so they finally decided to work together to go get it. Last week the U.S. charged a former UBS banker and a Liechtenstein consultant with helping clients avoid taxes. The IRS has confirmed that it is investigating the activities of 100 U.S. taxpayers with accounts in Liechtenstein. In addition, Australia, Canada, France, Italy, New Zealand, Sweden and the United Kingdom are involved in the case, according to the IRS. If you have an offshore account with unreported income, don�t bury your head in the sand and think this will blow over. It won�t. The IRS has little patience for those it has to chase down. It�s not a matter of �if� they will catch you; it�s only a matter of �when�. And since there�s so much cooperation going on between countries now, they will probably catch you sooner than later�. The IRS is less likely to recommend jail time if you file amended returns and pay what you owe. If you are not under an audit or investigation, and you make arrangements to pay what you owe, chances are good you�ll be sleeping at home for time to come.

When its good to be Broke

Sun, 25 May 2008 10:02:42 -0400

Most people with IRS problems don�t deal with them - until something ugly happens - like they discover they have a tax lien filed against them, or their business is padlocked, or their bank account goes bye-bye. People with IRS problems have one thing in common � they�re afraid...very afraid. They�re worried about �doing time� because they don�t have the money to pay the IRS. But there is no reason for the fear factor when it comes to being broke and dealing with the IRS. The IRS does all sorts of nasty things to people who intentionally don�t take action to solve their IRS problems. Severe consequences, like jail time, are reserved for people who fail to take action � not for those who DO SOMETHING. In fact, the more willing someone is to face up to their problem and seek a solution without the IRS having to chase them down, the more likely it is that the IRS won�t even threaten prosecution. If someone files their tax returns correctly, but just can�t pay them - there is hope. There are six different ways available to pay your debt to the IRS and avoid the particularly nasty consequences that the IRS reserves for those who don�t file. The IRS eventually will chase them down. There have been plenty of celebrities in the news lately with tax problems of their own. Some have tried to defraud the government � think Richard Hatch. Some claimed they just had no money, and have tried to work out a payment plan � think Willie Nelson. So if someone finds themselves in the �IRS Spotlight�, they�ll need to remember this: The IRS sees an honest but poor guy as a �Deal� and a dishonest conniver as �No Deal�. The bottom line? It�s illegal to not file. So do it. And if you can�t pay because you�re broke, find an IRS Specialist to help you work out a deal

"But this time I really not guilty!"

Fri, 09 May 2008 10:00:45 -0400

I started out practicing criminal law--- both trial work and appeals. I found it easier in some ways, when clients were "guilty." (Wait, I'm, would never say they were guilty, rather in some cases, there was a lot of evidence that, if believed, would tend to prove guilt). The really tough appeals were when I had a client with a rather expansive record, and for whatever reasons was found guilty of something he really didn't do. And the truth is, a lot of these appeals I lost. And here's why, and more important, Someone with a record is hamstrung from getting a fair trail. Why? Because the state can introduce criminal convictions to prove that the Defendant is of inferior character, and thus a liar. (I never understood why someone convicted of assault is untrustworthy -- some of the nastier bullies I know are very truthful --- and demonstrative. But really the problem is that someone with a record gets a lot of attention from the prosecution. And it's an uphill fight. Don't expect a decent plea bargain. Of course, many of my clients make the folly of assuming that if they're innocent, they can't be convicted. Every time I hear that it makes me laugh. The last place you should expect justice is in a court of law. Remember that. The reason I bring this up is that I received a call from taxpayer who was found guilty of a very slight infraction. She failed to file one year of returns and her total tax liability was around $2000. She received an 8 months sentence. I asked her why the plea deal was so terrible (the maximum sentence for her crime was 1 year). She told me that she had some problems in the past. She had a long record of non-compliance. She told me that she made an honest mistake. She thought her return was filed but it wasn't. And with a long history, I told her I thought she made the right decision to plead guilty, even though it meant certain jail time. We both talked a little bit more, and we came to a simple conclusion. She wasn't being punished for failing to file for one year --- she was being punished for her past. She was being punished for a reputation. Remember, do not expect justice in a court of law. The best way to get justice is to avoid court all together. And the best way to avoid court all together if you are a taxpayer is to always file your returns --- it's a crime not to. File your returns if you owe money. Especially if you owe money. Owing money to the IRS isn't a crime --- it's more of a national pastime. But failing to file a return, even for one year, may give you 8 months to think about things from inside a sparsely decorated federal penitentiary camp.